Financial Analysis of Tesla Motors
Table of Contents
Overview.. 3
Analysis of Tesla Motors Financial Performance. 4
Liquidity: Current Ratio. 5
Debt to Equity Ratio. 5
Profit Margin. 5
Price/Earnings (P/E) & Price/Cash Flow (P/CF). 6
Insight into Critical Accounting Information & Disclosures. 6
Summary of Findings. 7
Investment Recommendation. 9
Sources. 10
Overview
Founded in 2003 by a bunch of my fellow techno-geek engineering comrades in Silicon
Valley, Tesla Motors (“Tesla”) has quickly stolen worldwide press in the auto
manufacturing business world. The initial goal of Tesla was to construct an electric vehicle
that was truly a work of art. Pursuing this objective started with the Roadster and was fully
realized with the Model S.
Headquartered in Palo Alto, California with 2,000+ employees and led by the visionary
Elon Musk, CEO of Tesla, Tesla initially launched the Roadster in 2008. After four years
of sales, 2,300 zero emission cars roamed the streets of 37 countries. As the company grew
and learned from the Roadster, Tesla executives knew they had to develop additional
models to create a more sustainable business model in order to attract capital market
investors. To achieve this goal, on June 22nd 2012, the Model S was officially launched in
Fremont, California. The stigma to live with and accept something worse than the
traditional gasoline car by purchasing an electric car was forever changed.
Tesla continues to drive exciting research and development work with focus on the Model
X Crossover due out in 2014 as well as joint ventures with Mercedes B-class and Toyota
RAV4 EV. The relationships with these organizations simply proves Tesla engineers are
onto something with two large car companies seeking their electric powertrain design.
Additionally, Tesla offers free supercharging (expedited charging from hours to minutes)
as well as battery swap which can be done in 90 seconds, half the time it takes to fill the
traditional tank of gas.
Recently the Tesla Model S was announced by Consumer Reports as being “the best car
ever,” scoring 99/100 which is essentially perfect. Consumer Reports even stated that the
only reason the Model S did not receive 100/100 was simply due to it being so new to the
market and not having the history that other car manufacturers have. In addition to this
recognition, the Model S has also received a 5 star safety rating in all categories by the
National Highway Traffic Safety Administration (NHTSA). Most people may believe that
